Google Inc. has announced a program that will enable employees to sell vested stock options in an online auction. Under the Transferable Stock Option (TSO) program, employees will still be able to exercise their options, but will also be able to sell their options to financial institutions as an alternative.
Google will amend the terms of eligible employee stock options to make vested options transferable. The auction will be managed by Morgan Stanley. Smith Barney will serve as the employee stock option administrator. Google is working with multiple financial institutions to participate as bidders in the auction. Google's employee stock options typically have a ten-year term from the grant date. Under the TSO program, Google's employee stock options, upon transfer, will have a lifespan of the lesser of two years or up to the remaining term under the original grant.
Google expects this program will go into effect in the second quarter of 2007. Only stock options issued since Google's initial public offering will be eligible for this program, and Google's Executive Management Group may not participate in the program. This program will not result in a change to the accounting method used for employee stock options.